Will regional newspapers still exist in 10 years time?
The Daily Mail and General Trust decision to sell Northcliffe, its local newspaper division, provides an insight into how dire the outlook for the regional newspaper market really is, say some.
Earlier this week DMGT chief executive Martin Morgan told investors: "As far as local papers are concerned we've been quite clear that we are not interested in putting fresh capital into that sector…
"We are open to any worthwhile approaches concerning consolidation if they were to occur."
He was reporting that revenues were down 10%, but profits have been maintained thanks to cost-cutting. The strategy is common across the sector with most of the major players reporting falling revenues, that have been addressed through cost-control.
That is why there is a growing chorus for greater consolidation in the sector, coupled with media deregulation which would allow traditional newspaper publishers to invest in radio and television operations.
But the fact that DGMT is not interested in putting fresh capital into such cross-platform opportunities suggest it does not believe the revenue that might be generated will make up for what has already been lost in the past.
In a strident post in his blog The Guardian's Roy Greenslade summed up the concerns many are expressing: “So let me get this right. One of the best-run, shrewdest and most profitable of newspaper companies wants no part of the "brave new world" following consolidation.
“Meanwhile, as Williams said - repeating the view of DMGT chief executive, Martin Morgan, yesterday - it is open to offers from other would-be consolidators.
“It stretches credulity to believe that any business executive would pass up the opportunity to reap the supposed rewards of a brave new world.
“Isn't the real truth the fact that all projections suggest that the local and regional newspaper industry will be a busted flush within the next decade?
“Consolidation may well bring extra profits during that time, firstly through economies of scale (aka cost-cutting) and subsequently by "further efficiencies" (aka cost-cutting) and then by "strategic reviews" (leading, you've guessed it, to cost-cutting).
“All the while, the consolidators will be maximising profit margins.
“That's the bleak picture of the industry's future (and bleaker picture still for journalists and journalism). Publishers may call it consolidation. More properly, it should be called disintegration. Or death by a thousand cuts.”